Lapsed on Your Homeowner’s Insurance Payments?

Five tips on how to get a new policy without breaking the bank

Everybody wants to save money and nobody wants to think of the worst. As a result of those two mindsets, many people go without various forms of insurance or allow their existing insurance to lapse. When it comes to homeowner’s insurance (HI) first-time buyers may be relieved to hear that it’s not something you’re legally required to have. However, if you’re buying your house via a mortgage (which is the vast majority of us), your lender is going to want you to have HI in place to cover repairs.

If you lapse on your HI payments you’re not just putting your house at risk. You’re taking a chance on losing your possessions or not covering yourself in the event of someone being injured in your home. Your mortgage lender may respond by nominating their own policy and having you pay higher premiums. They might even instigate legal action against you. Should you find yourself in a lapse, here’s how to get started on a new policy.

What qualifies as a lapse?

As we mentioned, a lapse can come about from a failure to keep your payments up on their due dates. In some cases, it doesn’t have to be any more than a day overdue to qualify as a lapse. Other insurers may operate a grace period of a few days where you have time to make amends. It can also occur as a lapse in information between you and your HI provider; for instance, if you have made any renovations or changes to your property and neglected to inform them (such alterations can of course affect the terms of your policy). You may even have been keeping on top of your HI payments but neglected to get a renewal in place in time.

You can think of these lapses as akin to an accident record on your driving insurance. The lower your driving claims history, the more attractive and insurable a prospect you are. HI lapses can make your current or future insurer view you in a bad light when it comes to putting a number on your premiums. Like most bad situations, the sooner you take action on a solution, the better.

What steps to take after a lapse

Your first step should be to find out if your current HI provider is amenable to reinstating your pre-existing terms. Presuming you’re happy with them (and vice versa) your solution may be as simple as reaching out to get the original policy back on track. If this step works, it’s much simpler and less unpleasant than putting in the work to find a new HI provider who will likely have to discover that you lapsed on your previous agreement. You may be required to pay a fee to have your policy reinstated.

Secondly, find out if you’ve had a policy placed on you by your provider to cover HI. This probably won’t be the case if the lapse is a short one, but if the days without payment have been accruing, then your insurance provider may have taken their own steps and force-placed HI. It’s an unpopular practice with homeowners and has been coming under wider review in recent years. If your insurer has indeed force-placed insurance, you must ensure this is no longer in place whether you’ve renewed with your original provider.

If there’s no way to mend things with your original insurer, it’s time to shop around and find the best HI from another provider. Always be honest with any potential new providers about why your last HI arrangement came to an end. If you do, you’ll be aware from the outset how much you’ll be expected to pay under the new arrangement and be sparing yourself any nasty financial surprises. You may even consider raising your deductible to get a better overall deal on premiums.

A fourth step is to find out if there are any further ways to get discounts on your new HI policy. Will making security improvements to your property lower the premiums? Could you combine auto and home insurance? Another way to possibly save yourself some money is to have your home inspected when a new policy is in place. This way, should any claimable issue arise in the future you’ll have a record that it didn’t occur during the period of the lapse (during which you wouldn’t be covered).

Last but not least, it’s important to remember that your insurance needs will be unique to your own situation. Take the time to sit down face to face with a qualified insurance provider. They’ll review your situation in-depth beyond an initial phone call or other contact. With everything on the table from claims histories to credit scores, both you and any potential provider can be sure you’re getting the best value for your money.

Avante Insurance is a South Florida family owned and operated agency providing an array of insurance services to meet the individual needs of our customers. If you need any information on insurance, you can call us at 305-648-7070, request an insurance quote or contact us with any questions or comments.